Incoming O-I CEO praised as vigorous leader

3/24/2004

Steven R. McCracken was chosen to be the new chief executive at Owens-Illinois Inc. because of a combination of leadership and values, said a board member of Toledo's second largest company.

"People who work for him and with him ... loved working for him and those above him feel challenged by him. It's a tremendous combination," said John McMackin, a Washington attorney who is an O-I director and was on the firm's executive search committee.

"One of the senior people at DuPont said that Steve was a guy that they always knew would be promoted or fired in that he was always pushing against the leadership to move faster, to question policies."

O-I announced Monday that Mr. McCracken, 50, will take over as president and chief executive officer April 1 and will assume the title of chairman at the company's May annual shareholders meeting. He has spent his entire 29-year career at E.I. DuPont De Nemours & Co., based in Delaware.

The new leader comes to O-I at a crucial time in its 100-year history. It is taking on $835 million in debt - increasing total debt to nearly $7 billion - as part of its acquisition of Europe's second largest glassmaker, and the company has a continuing burden of asbestos-liability claims, which have hit more than $2 billion.

Those are challenges that Mr. McCracken can handle, said Mr. McMackin, who said he also was impressed by the new hire's values, fostered in Franklin, Ind., just south of Indianapolis, where he was raised. Mr. McCracken is a magna cum laude graduate of Rose-Hulman Technology Institute in Terre Haute.

"He's a Midwestern boy with Midwestern values and I think that fits the O-I culture," the O-I board member said. "He and his wife really like the idea of being in Toledo, and that speaks well for his success."

The appointment was greeted favorably by Wall Street analysts at Banc of America Securities and J.P. Morgan Securities Inc.

"At first blush, we view the announcement as positive," wrote George L. Staphos, the Banc of America analyst. "Though new to O-I, McCracken's experience with running a large global business should be valuable as O-I realigns itself in the next year. O-I will be focusing on integrating its recent acquisition of BSN [Glasspack SA] in Europe as well as divesting some or all of its plastic blow-molding business."

Stewart Scharf, an equity analyst with Standard & Poor's in New York, said Mr. McCracken's biggest challenge may be controlling the mounting asbestos claims. Industry experts are carefully watching debate in Congress over creating a national asbestos settlement program that could cap liability claims and help firms such as O-I that formerly made products containing the substance that can lead to cancer.

"He's being thrown into the fire. Let's see if he can rescue

them," Mr. Scharf said. He credited the Toledo firm, however, for hiring an outsider to run the company, providing a "fresh perspective," but said that melding the BSN operation smoothly and dealing with O-I's debt will be key issues for the new leader.

Mr. McCracken was hired at DuPont in 1975 as a field engineer and worked in a number of the company's divisions, including four years as managing director of DuPont Lycra in Europe and vice president and general manager of Corian Surfaces.

He most recently headed Invista, formerly the DuPont Textiles & Interiors division. That unit, which had $7 billion in sales last year, was the subject of much speculation as DuPont executives decided what to do with it, said a textile industry insider.

There were some who thought Mr. McCracken would run the unit as a separate company or that it would be sold and he would take the Lycra brand name and start a new company, or that Mr. McCracken would be out of a job.

DuPont said last fall it had signed a definitive agreement to sell the operation for $4.4 billion to a unit of Koch Industries, a privately owned company in Wichita Falls, Kan.

The deal is still pending.

Mr. McCracken was given the option of running the company as a division of Koch, but he declined and said the handling of Invista is evidence " that he could create a business that produced tremendous value for DuPont," said Mr. McMackin, the O-I board member.

The Toledo company's board was not bothered by Mr. McCracken's lack of experience in the glass and plastics industry because

"Steve is a very quick study and a decisive guy," said Mr. McMackin.

Mr. McCracken, in an interview Monday with The Blade, said he could not comment about specific issues at his new employer until he has had time to become better acquainted with the company.

He will be moving from Chadds Ford, Pa., an upscale suburb north of Wilmington, Del., where Invista is located.

It was unclear what O-I's largest shareholder thought of the new CEO. Kohlberg Kravis Roberts & Co., which owns about 25 percent of the company's stock and holds four board seats, declined yesterday to comment about the appointment.

O-I's stock, which closed down on the day of the hiring announcement, was unchanged yesterday at $12.60 a share on the New York Stock Exchange.

Contact Mary-Beth McLaughlin at

mmclaughlin@theblade.com

or 419-724-6199.